Your clients should feel valued

I know that the vast majority of financial advisors work hard to make their clients feel valued and important. So if the issue is not that advisors don’t value their clients, the problem must lie elsewhere.

– “FAILURE TO COMMUNICATE”

The study’s report, titled Wealth in a Digital Age, revealed the findings from research conducted among a broad range of American and Canadian investors. The study looked at how investors representing different age groups and wealth levels receive advice. The study also probed attitudes among investors who work with advisors – which is where the finding about feeling sufficiently important emerged.

Reflecting on conversations I’ve had with investors over many years, I can think of four reasons for the perception gap surrounding feeling valued:

There have been some instances in which a mistake was made in a client account that wasn’t handled well despite the advisor’s good intentions.

Second, there are cases in which advisors work hard and do the right things in communicating with their clients, yet have a blind spot that sends an unintended message.

Another reason is a misalignment of expectations between clients and advisors regarding meetings and portfolio reviews.

In the fourth scenario, clients feel that their advisor isn’t genuinely listening to them.

Each of these reasons for clients feeling unimportant represents a communication gap. In the words of the prison warden in the 1967 movie Cool Hand Luke, starring Paul Newman: “What we’ve got here is failure to communicate.”

– FAILING THE TEST IN MOMENTS OF TRUTH

The first reason that clients feel unimportant can arise from your failure to manage a client’s experience in dealing with you and your team, especially when something goes wrong. We’ve all encountered cases in which mistakes have been made and getting them resolved has been a huge exercise in frustration. We’ve been on hold for an extended period and heard a recorded message tell us: “Your call is important to us” – and we’ve doubted that statement.

After all, words are cheap. When there’s a hiccup, actions are what matters. That’s why ensuring that your clients don’t get frustrated when something goes wrong is key, even when a trivial matter such as a mistake in a change of address is the issue. Procter & Gamble Co. calls these “moments of truth” – instances in which customers evaluate whether a company is delivering on the promises that it made.

Whenever there’s a hiccup, your clients unconsciously put you to the test. This was the topic of my column in December 2018, in which I outlined a 10-step process to ensure that you and your team turn service problems into a validation of your clients’ perceived value and importance to you. Get this “service recovery” experience right and, research shows, your clients will walk away feeling more positive about you than if the mistake had never happened. Get it wrong and your clients may justifiably wonder just how important they are to you.

– ENSURE THAT EXPECTATIONS ARE ALIGNED

A second reason that clients don’t feel valued are instances in which you fail to deliver on clients’ expectations regarding financial plans, portfolio reviews and meetings.

Sometimes, advisors are blindsided by things that are left unsaid. I recently talked to an advisor who lost a couple who’d been long-standing clients because another advisor had done an in-depth financial plan for a family member. That inspired these clients to meet with that other advisor, who walked them through the benefits of financial planning and, ultimately, led the couple to decide to move their account.

The incumbent advisor did his best to salvage the situation, even flying in a financial planning expert from the firm’s head office to meet with the clients to talk about preparing a plan for them. But it was too late.

“That was one of the most unfair things I’ve ever experienced,” the advisor told me. “If those clients had ever expressed the slightest interest in a financial plan, I would have been happy to prepare one. But they never showed any appetite for it. All they wanted to do when we met was to talk about their account.”

While this situation seemed unfair to the advisor, from his clients’ point of view, their expectations had changed. When they saw their family member getting something that their advisor had never offered, in short order they went from satisfied to feeling neglected.

If clients don’t have a financial plan, that omission can become a lightning rod for dissatisfaction. One very successful American advisor told me that when he meets with prospects, his first question is: “What kind of written plan have you developed with your advisor to ensure that your income exceeds your expenses in retirement?”

If the answer is that the prospect doesn’t have a written plan, that advisor’s chances of winning over that prospect have just taken a big leap.

– “I DIDN’T THINK THAT YOU WANTED TO MEET THAT OFTEN”

I don’t want to overemphasize financial plans as a cause of client discontent. They make up a small portion of the cases in which there is a mismatch regarding expectations. A more common problem relates to the frequency of meetings and portfolio reviews.

Let’s recognize that there are cases in which client expectations regarding meetings aren’t realistic. When a client says that they’d like monthly meetings, unless the client has an exceptionally large account, you are unlikely to be able to deliver on that request. But cases of outrageously out-of-line expectations are relatively uncommon. More often, the problem lies in lack of clear communication surrounding expectations – not just at the beginning of a relationship, but on an ongoing basis.

I recently talked to an advisor whose largest client told him in a quick update phone call that she was unhappy with the fact that they hadn’t met since the market turmoil in October to talk about the impact on her portfolio. The advisor was shocked. Just last spring, this same client told him that she was very busy and felt that quarterly meetings were unnecessary and she would prefer to meet twice a year. And the advisor felt that because they had met in September, he was in good shape in terms of delivering what that client wanted.

This advisor was in good shape in delivering what this client wanted last spring. But markets had caused this client to change her expectations. And she did not take responsibility for her advisor’s failure to read her mind and discern her changing expectations. When the advisor told her that he’d be happy to schedule an immediate meeting, but that he had been following her preference in scheduling two meetings a year, the client’s answer was: “You should have known that I’d want to review where I stand, given what’s happened to the markets.”

Is this client’s view fair? Probably not. But it does represent the reality of many clients’ manner of thinking.

That’s why one advisor has developed a protocol to check in with his top 20 clients whenever he thinks they could be concerned and may like to meet. One of three things can trigger those calls and emails to clients: a market decline of 10%; a period of exceptional market volatility; or dire headlines about the economy in the newspaper.

This advisor says that clients almost always thank him for contacting them, but say that things are fine and there’s no need to meet. But, occasionally, he does have a client take him up on the offer. This advisor would rather err on the side of caution. Further, by offering to meet his clients, he’s ensuring that his top clients feel valued and important.

Here’s another simple approach to ensure that you are delivering on your clients’ expectations. Consider ending meetings with something along these lines: “I value our relationship and want to express my appreciation for the opportunity to work together. I wonder what one or two things that my team and I could do to improve your experience in working with us?”

Then, having asked that question, sit back and listen. Your client may well just thank you for the offer, and say there is nothing that comes to mind. In that case, you could respond that if anything ever does come up, you’d like the client to not hesitate to call you.

Now, of course, these won’t be the exact words that you use. You’ll need to frame them in your own language. But by asking your clients this question, you demonstrate their value to you and reduce the odds that you’ll be blindsided because clients’ expectations have shifted.

These are some of the reasons that clients don’t feel valued. In my next column, I’ll talk further about how to ensure that your clients feel important.

Dan Richards is CEO of Clientinsights (clientinsights.ca) in Toronto. For more of Dan’s columns and informative videos, visit investmentexecutive.com.